WHSmith PLC has reported that its travel division delivered a ‘strong performance’ for the six months ending 29 February 2020, registering a trading profit increase of 11% to £49m/$60m (2019: £44m), of which £9m (2019: £6m) relates to the company’s growing international business including MRG and InMotion.
However, as reported in April, the UK company suffered from a significant decline in passenger numbers across its UK Travel business as a result of travel bans. The vast majority of its stores at airports and railway stations have been temporarily closed.
In March 2020, total group revenue fell 25% year-on-year. Due to the high number of store closures, however, revenues across the group dropped around 85% year-on-year in the latest week of trading to 4 April 2020.
On this basis, WHSmith expects Group revenue to decrease by around £114m/$141m in April (a 90% drop year-on-year), with a reduction in operating profit of approximately £39m compared to 2019.
Prior to widespread airport and rail store closures, total WHSmith Travel revenue reached £432m/$526m (2019: £364m), up 19%, in the six months ending in February, compared to last year, and up 2% on a LFL basis driven by various initiatives and ongoing investment.
UK TRAVEL REVENUE REACHES £271M
As at 29 February 2020, WHSmith’s global travel business, including MRG and InMotion, operated 1,194 units, and excluding franchise units, occupies 1.0m sq ft.
For WHSmith’s UK travel outlets, total revenue reached £271m, (2019: £260m) in the half, up 4% on the previous year. Total revenue in ‘Air’ was up 3% with LFL revenue up 2% and in Rail total revenue was up 2% with LFL revenue also up 2%.
“We worked hard across all channels in the first half to drive spend per passenger, delivering some positive results,” said a WHSmith financial statement.
“Our focus on developing our large store formats continued and we expect these formats to position us well for the future. Our experience continues to show that we can deliver much higher sales per passenger from these large stores, through improved layouts and increased capacity.”
Despite the current uncertainty, WHSmith says it remains committed to refitting its 5,000 sq ft at Heathrow Terminal 2 this summer.
LHR T2 FLAGSHIP REFIT
The flagship store will feature an extensive news, books and convenience offer with the addition of a health and wellbeing department with specialist staff. The health and wellbeing department will comprise a comprehensive range of over 3,000 products curated through WHSmith’s partnership with ‘market leading brands’. In addition, the pharmacy counter will offer healthcare advice along with a wide selection of medicines.
“During the current crisis, we are also delighted to be in a position to support frontline NHS staff from our hospital stores, ensuring we can continue to play our part in the communities we serve,” added the company.
“Since April, we have extended our grocery ranges in these stores to include over 90 essential items to further support frontline workers at this time. In addition, we have doubled the NHS staff discount to 20% and have supported a large number of hospitals with stock donations.”
In our UK Travel business, we have seen a significant decline in passenger numbers as a result of travel bans; the vast majority of our stores at airports and railway stations have been temporarily closed
Carl Cowling, Group Chief Executive, commented: “The emergence of Covid-19 and the associated global pandemic has affected all of us in ways that were unimaginable only a short while ago. I have enormous admiration for how our colleagues across WH Smith have responded to these unprecedented times and I would like to thank them all.
“Our primary focus over the past eight weeks has been to protect our colleagues across all areas of our business and our customers. We have supported many good causes and we have kept over 300 stores open to serve the communities that most need our services at this critical time, including the NHS and the communities that rely on the Post Office services we provide on the high street.
“There was very little impact of Covid-19 on our first half results, however inevitably the performance in the second half will be very different. During the first half, we continued to see strong sales growth in our Travel business with total revenue up 19%, driven by our ongoing investment and initiatives in our UK business and our growing international businesses.
“Since March, we have seen a significant impact on our business as a result of Covid-19, with the majority of our stores closed around the world. We were fast to react to the situation and issued new equity via a placing, raising c.£162m on 6 April 2020. We also secured an additional £120m of bank funding.
“We are a resilient and versatile business and with the operational actions we have taken including managing costs and the new financing arrangements, we are in a strong position to navigate this time of uncertainty and are well positioned to benefit in due course from the normalisation and growth of our key markets.”